By: Staff Writer
October 13, Colombo (LNW): Sri Lanka will need to accelerate digitalisation, improve workforce productivity and bring more people into employment to maintain sustainable economic growth as its population ages, according to a new report released by the International Monetary Fund (IMF).
The report, “Shaping the Future of Asia: Opportunities and Challenges”, identifies Sri Lanka among the Asian economies that have passed their demographic dividend phase, a period when a relatively large working-age population can support faster economic expansion. The country now faces the challenge of a shrinking workforce alongside rising demand for pensions, healthcare and other services associated with an ageing population.
Sri Lanka shares these demographic pressures with economies including China, Japan and South Korea, where the proportion of working-age people is declining relative to the wider population. According to the IMF, these changes could have far-reaching consequences for labour supply, public finances and long-term living standards.
With population growth no longer expected to provide the same economic advantages, the report stresses that Sri Lanka must increasingly rely on productivity gains, technological progress and more effective use of its available workforce.
Expanding employment opportunities for women and encouraging older people to remain economically active are among the measures identified as important responses. The IMF estimates that bringing women’s employment rates across Asia up to the level of men’s could increase the region’s workforce by more than 112 million people.
The report also points to Sri Lanka’s GovPay platform as an example of how digital innovation can modernise public services. Digital payment systems can make government transactions more efficient, improve transparency, reduce opportunities for financial leakages and strengthen public financial management. They can also lower transaction costs and broaden access to financial services.
Artificial intelligence and other emerging technologies could provide further opportunities to offset the economic effects of demographic change. The IMF notes that digital tools can improve productivity, streamline service delivery and create new avenues for economic activity. However, these benefits will depend on adequate investment in digital infrastructure, education, skills development and innovation.
Youth unemployment and the gap between educational outcomes and labour market requirements remain additional challenges for Sri Lanka. The report highlights the importance of equipping workers with the skills needed to adapt to technological advances, particularly as artificial intelligence becomes increasingly integrated into businesses and public institutions.
The IMF’s assessment points to a broader need for structural reforms that strengthen financial development, encourage innovation and increase participation in the labour market.
While an ageing population presents substantial long-term economic challenges, the report suggests that timely reforms and wider adoption of technology could help Sri Lanka maintain growth and protect living standards in the years ahead.
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